EUR/USD Price Reverses Direction on the US Stimulus Package Updates

EUR/USD Price Reverses Direction on the US Stimulus Package Updates

Safe-havens rallied on the news coming from Washington while equities and risk-related currencies retreated. What moves markets today?

Equities

On Tuesday President Trump made a U-turn and instructed its administration to stop negotiating until after the elections and he promised that after “his victory” he would pass a major stimulus bill that focused on hardworking Americans and small businesses. However, Trump urged the US Congress to approve a $25 billion bailout to aviation companies. Meanwhile, the Fed Chair Powell warned that failure to secure financial aid would lead to a weak economic recovery and create unnecessary hardships.

These updates negatively affected investor’s sentiment sending global stock markets lower and safe havens higher.

Stock Market

Change %

S&P 500

-1.3%

Dow Jones

-1.2%

NASDQ

-1.5%

Japan 225

-0.5%

DAX 30

-0.4%

FTSI 100

-0.8%

CAC 40

-0.5%

Currencies

The US Dollar as a safe-haven benefited from the recent updates and rallied on Tuesday against risk-related currencies. The US Dollar index steadied above the inverted head and shoulders neckline therefore, a close above 94.04 could send the price towards 95.24.

The EUR/USD failed on Tuesday to overtake the 50-day average then pointed lower for a test of 1.1713. A daily close below this level could send the pair towards 1.1621.

The GBP/USD tested the 1.3000 level then lost 0.8% of its value due to the US dollar rally. The price could drop further towards 1.2773.

Commodities

The oil price benefited from the news of a possible storm in the Mexico Gulf that could put oil production on hold however, the rally lost steam on the news of delaying the US stimulus package. The Brent oil, failed to close above $42.50 hinting to re-test $39.60, while the US Crude failed to overtake the 50-day moving average, and therefore the price could fall towards $38.37.

The Gold price rebounded from $1.920 and pointed lower eyeing a test of $1,861. A daily close below that level could send the precious metal even lower towards $1,796.

Looking Ahead

Investors will follow the ECB president Lagarde’s speech at 4:10 PM (UAE time) and Fed member Barkin's speech at 6:00 PM, then at 6:30 PM markets will find out about the change in the US oil inventories, and by 10:00 PM the FOMC minute will be released. Fed members Williams, Kashkari will talk at 10:00 PM, 10:15, and 11:00 respectively.

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